Benefits of forecasting property taxes

There are several benefits of forecasting taxes. For the individual or company seeking to expand real estate investments, tax forecasting can be an approach to negotiating an offer on a Property. For commercial property owners, forecasting is also a tool for preparing budgets by providing an idea of where decreases might need to be made or whether there should be increases in some lines to make up for higher tax assessments.

In county and municipal governments where Property Tax is the main source of revenue, property tax forecasting as part of the budgeting and fiscal process. Real property, including buildings, homes and land are all subject to property taxes.

Strategies for property tax forecasting

Real and commercial property history is an indicator of the property tax base. Evaluating the previous year’s appraisal offers a baseline for potential revenues. Improvements in the GDP, (Gross Domestic Product) is another indicator Forecasting Property Taxes. GDP increases signal an improvement in employment numbers, and that can translate into companies expanding and more people being able to purchase homes. The number of building permits and inspections during a period is also a signal that residential and commercial properties are being built or remodeled. These will be sources of property tax increases.

Assessed values of property may be assigned based on the fair market value of a dwelling or structure, and the value of similar properties in a district. In the case of a property such as a hotel, factors such as expected vacancy rates will be taken into consideration. However, if the hospitality industry experiences a year when vacancies are down and there is a tax increase, that will impact the industry’s bottom line.

The impact of forecasting taxes

Forecasting taxes on properties is not a foolproof process and can be affected by external forces. Forecasting property taxes can be unpredictable because the political climate often impacts the valuation process. Policymakers need to know how they will balance budgets and meet constituents needs. They may base the property tax increases based on factors such as infrastructure improvements, new schools and other community needs. Property taxes pay the salaries of government personnel, so it is easy to see that when the revenue from taxes is flat, it can be a source of stress for government officials.

Conclusion

It can be difficult to achieve perfect tax forecasting but we have developed a proprietary system that will help you gain an honest assessment of what your current and future property taxes will be. However, it is always important to pay attention to variables such as political climate, appraisal systems, and historical data. Get a free property tax review.